Comparative Politics

Comparative Politics

CORRELATES OF CRISIS INDUCED CREDIT MARKET DISCIPLINE: THE ROLES OF DEMOCRACY, VETO PLAYERS, AND GOVERNMENT TURNOVER

Puspa Amri Sonoma State University
,
Thomas Willett Claremont Graduate University
,
Greg Richey University of California, Riverside
,
Jacob Meyer Claremont Graduate University
Abstract
Do countries learn from their mistakes? Here we consider one example of this question with respect to banking crises using the concept of effective learning. Excessive credit growth is widely considered to be the most important contributor to banking crises. Thus, it is interesting to see whether banking crises are associated with lower rates of credit growth in the future and if so, what are major factors which influence such changes in behavior. This paper offers an investigation of some of the political economy factors that may influence whether crises result in greater discipline over future credit growth. Overall, we found very little average effective learning in stable autocracies and found considerable discipline in stable democracies; nevertheless, we found even larger discipline effects in countries that transitioned to democracy during and in the wake of a banking crisis.
Content
Thumbnail image of content item
Comments
Log in using your APSA account or Register to comment
Comments are not moderated before they are posted, but they can be removed by the site moderators if they are found to be in contravention of our Commenting Policy – please read this policy before you post. Comments should be used for scholarly discussion of the content in question. You can find more information about how to use the commenting feature here .
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.